Sacramento Metro Chamber of Commerce - Sacramento, CA
JAMES S. SIMPSON
FEDERAL TRANSIT ADMINISTRATION
SACRAMENTO METRO CHAMBER OF COMMERCE
JUNE 3, 2008
On behalf of President Bush and Transportation Secretary Mary Peters, I’m delighted to be here with you to discuss the business case for investing in public transportation – and to lay out some of the challenges we must address to move our country forward.
I’m impressed by the fact that the Sacramento Regional Transit District is home to one of the older light rail systems – from 1987.
It’s clearly helped to transform downtown Sacramento into a vibrant, walkable city.
And progress on the transit front continues. We at FTA are pleased to see the progress made on the highest priority transit project in the region -- the South Corridor Light Rail on its proposed South Line extension. This project is now in Preliminary Engineering under our New Starts program.
Here in Sacramento, and around the country, times are really changing. . .
For decades, transit took a back seat to driving and the “open road” . . .
Today transit is central to relieving traffic congestion. . . spurring economic development. . . enabling “smart growth”
. . . and offering alternatives to gas-guzzling automobiles.
The “value proposition” for transit has never been greater. . .
Ridership is at its highest level since late 1950s – with over 10 billion trips taken in the U.S. last year.
Every $1 invested in public transportation projects generates $6 in local economic activity.
And transit saves the nation almost 4 million gallons of gasoline a day and drastically reduces carbon dioxide emissions.
Increasingly, transit is seen as a bona fide amenity in fast-growing regions. New or extended light rail systems recently opened in Charlotte, Salt Lake, Denver, San Diego. Phoenix light rail line opens later this year. Norfolk light rail under construction.
The bottom line is that transit improves mobility for our nation and serves the needs of Americans from many walks of life – from those living in densely populated urban areas, to the elderly, rural, and low-income families living in small towns everywhere.
Transit also helps to drive our economy. In fact, momentum is building for transit-oriented real estate development around the nation -- there’s a “ripple effect” at work. . .By 2030, demand for housing near transit is expected to increase to 16 million households. Affordable housing near transit increases access to jobs, education.
In California alone, there are more than 20 successful transit-oriented development projects under way. We need look no farther than the Downtown Plaza here in Sacramento’s central business district – a successful retail and business sector built around light rail has replaced a once-crime-ridden area.
We’re making progress on several fronts. . . but it’s not nearly enough to get us where we need to go -- and keep our economy moving forward. . .
Let me tell you about the wake-up call I’ve gotten over the last month. . .
I recently returned from extended travel in Europe, including London and Athens. . .
You can really see how our infrastructure, here in the U.S., is falling behind, by comparison. . . There’s an express train that takes you from the Athens airport into the central business district. It’s smooth, fast, and efficient.
Unfortunately, that experience does not compare favorably to a long, bumpy, traffic-filled ride out to Kennedy Airport in New York
-- or to the experience of navigating Penn Station.
While I was in Europe, I couldn’t shake the feeling that I was gazing in a crystal ball while I was there . . .looking into America’s future. .
Gas prices top $8.20 a gallon throughout Europe. . . people are cutting expenses to the bone. . . driving small cars. . . and using public transit as much as possible. . .
In Germany—Europe’s largest economy—the Federation of German Consumer Organizations is lobbying government to invest 5 billion euros ($10 billion) in public transportation.
Countries are arguing over whether to cap the fuel sales tax. France says yes; Britain says no.
“Dealing with the issue through taxes is not the solution,” says the German Federation energy director.
Here in the United States, we’ve got to recognize that we’re headed down the same path as Europe. . . and the day of reckoning is upon us. .
We’ve reached a critical juncture -- a tipping point, if you will. Surging gas prices, traffic gridlock, and environmental concerns are encouraging more and more people to look to transit as an affordable, reliable means of travel – right here at home.
In fact, driving in the U.S. actually declined by 4 percent in March 2008 over the same month last year. . .
But we’re not fully prepared to handle a new paradigm -- one where far more people use public transportation to get around, and people drive around much less. . .
We’ve got deep structural challenges that we must confront on every level – federal, state, and local -- if we’re going to build a 21st century transportation infrastructure in this country.
We face a projected $3 billion shortfall in the Highway Trust Fund account -- our principle mechanism for generating funding for transportation and transit projects. . .
Many people advocate for a big gas-tax hike. . . but this is not a panacea. . .
As gas prices go up, people drive less -- and they drive more fuel-efficient cars. . .
So there are incentives working against generating more revenue through fuel taxes. . . .
In any case, even if we were to boost the fuel tax in the U.S., we’d be raising it on the current 18.5-cent level. Even a sizable increase would not approach the roughly $4 tax equivalent that’s levied on fuel in most of Europe – much of which is re-invested in transportation and infrastructure growth.
We also have to manage our transportation assets better. . . Many bridges, tunnels, roads, not in a state of good repair. . . The U.S. faces at least a $170 billion annual funding gap on infrastructure needs.
We absolutely must recognize that attaining – and maintaining – a state of good repair is critical for transit industry, especially as ridership grows.
We’ve commissioned research recently that indicates that roughly one-third of the 15 top transit agencies’ heavy rail and bus assets are rated in substandard or poor condition.
Heavy rail assets (this includes subways) worth about $30 billion should be replaced immediately.
Roughly $39 billion is required to bring the top agencies’ assets to a state of good repair. This includes $8.8 billion in deferred rehabilitations for older subway stations and tunnels.
And over a 20-year period, rough $7 billion needs to be invested annually to both eliminate the backlog and achieve a state of good repair.
We must ensure that both our aging legacy rail and bus systems. . . and all the new light rail, rapid bus, and other assets going into operation. . . can be well cared for. . . and that we can afford to retool, repair, and upgrade them on a regular basis.
It is simply not good policy for the federal government, or anyone else, to make significant investments in new transit capacity if there is no assurance that these assets can be well-maintained over the long haul.
Let me give you a prime example.
FTA recently approved entry into the Final Design phase of a proposed 23-mile extension of the D.C. Metro out to Dulles Airport in Northern Virginia. This would enlarge the whole system by more than 20 percent.
But Metro’s operator, WMATA, faces a $500 million shortfall in the funds needed to make immediate, system-wide repairs on the current legacy system . . . .
Where will the money come from to pay for infrastructure maintenance. . . and for new capacity in all our transportation and transit systems?
We need all of you -- the business community -- to become part of the solution.
We need to do a better job of leveraging our public funds and taking advantage of the upwards of $400 billion in capital the private sector has available to invest in infrastructure.
One of the most promising tools is public-private partnerships. . . They’ve worked well in the highway sector. . . Now we’re advocating this model for building and operating transit systems around the country.
Pilot public-private partnerships have been established to fund transit projects in a couple of cities, including Oakland -- and we hope to see this idea catch fire.
Transit agencies, in particular, must look to public-private partnerships as a means of shifting project risk away from the public sector -- while tapping into alternative financing.
There’s much we can learn about this from Europe. . .
For example, London refinanced the northern extension of the Underground -- a $1.2 billion project -- through a public-private partnership . . . Italy and Belgium have also funded major rail projects this way. . .
While not perfect, public-private partnerships reflect the fact that we simply cannot continue to do business as usual in the U.S. . .
This is the wave of the future. . .and we need businesses to take a hard look at the PPP models that are out there. . .
We also must find creative ways to finance new infrastructure. That’s why we need to bring congestion road pricing into the mix. . .
While this remains a controversial idea, there’s no getting around the fact that American motorists have never been asked to contribute to the true costs of maintaining our roadways and other transportation infrastructure.
Implementing new high-speed toll lanes and road pricing plans that ask drivers to pay more during the busiest times of day should be part of a sensible strategy for financing the future of public transportation.
This is exactly the right moment for everyone who has the power to affect the transit industry -- local operators, state and local governments, Congress, and us FTA -- to take stock of where we are, and where we need to go -- financially, operationally, environmentally, politically, and economically.
I’ve often said that transportation is the circulatory system of our economy. We cannot afford to let it fail -- and we should not settle for a public rail system that is second-best behind other nations.
Now more than ever, we need leaders willing to make tough and courageous decisions about what it will really take to build and sustain a world-class transportation infrastructure, to keep our economy moving.
We need market-based solutions as well as government leadership.
And we need a mindset that is receptive to new ways of paying for -- and using -- our transportation networks.
So let us all pledge that we’re going to work together to find ways to make our rail and bus systems better, make them sustainable, and ensure that we can deliver to Americans the affordable mobility they need and deserve.
In closing, I want to congratulate the business leadership here in Sacramento for supporting the region’s vision on transit. . . and I want to leave you with a wonderful and inspiring Greek proverb:
A society grows great when old men plant trees whose shade they know they shall never sit in.
I truly believe that all the hard work we’re doing today to make America’s transportation infrastructure great, will pay off for our children, our grandchildren, and future generations.